An emergency or financial crisis can hit at any time. If you have a small emergency fund (say the $1,000 that Dave Ramsey recommends when you are paying down debt), many situations could propel you into a financial disaster. A $2,000 car repair could find you $1,000 short and your emergency fund completely wiped out.
Financial experts now recommend that you have 3 to 6 months (if not more) in your emergency fund, but if you are not there yet or don’t plan to have that amount for quite some time because you are paying down debt or otherwise unable to put a lot of money away, there are other ways you can enhance your existing emergency fund.
Have a Fully Stocked Pantry
Buy your food at the lowest prices possible, and little by little, buy more than you need. You don’t have to spend hundreds of dollars creating a stockpile. Quite the opposite. If you find a pound of pasta on sale for .50, don’t just buy two boxes, buy 10 boxes. For $5, you have enough pasta for several meals for your family. You spent an extra $4, but you now probably have enough extra pasta for 8 more meals. Keep doing this whenever you find a good sale. In no time you will have a stocked pantry and freezer.
If you run into a tight month or need to generate extra cash, simply live off the pantry basics for a week or even a month if your stockpile is big enough. You have just saved yourself the majority of money you would spend on groceries for the week or the month.
Have a Garage Sale Pile
If you have kids, you know how quickly they outgrow clothing. When you shift their clothing from summer clothes to winter clothes, simply put the summer clothes in a garage sale pile (assuming the clothing will be too small next year). Make it even easier on yourself by pricing the clothing before you put it in the designated garage sale area in your home.
Also, periodically declutter and put the items in the garage sale. When you hit a rough financial patch, have a garage sale the next weekend. While garage sales can be labor intensive, you already have everything gathered and priced, saving yourself at least half the time you would have spent.
Have an Open Line of Credit
Ideally, you will have no credit card debt. Even if you prefer not to use credit cards to stay debt free, it is still a good idea to have one credit card with an open line of credit. Using this should be a last resort, but if you have to, it will be available to you.
Many people have smaller emergency funds than they would like. However, until you are able to build it up to the level you would like, these strategies can provide you additional cushion, perhaps increasing your $1,000 cash emergency fund by another $1,000 in money you won’t need to spend on groceries and money you can generate with a garage sale.